School tax reform to be discussed in Bristol

Monday

Lower Bucks County residents are lining up their questions for today’s Property Tax Independence Act community meeting hosted by Rep. John Galloway, D-140.

Galloway, who has been a strong proponent of eliminating property taxes, will take the public’s questions and concerns regarding the proposed bipartisan HB76, which calls for the elimination of all school property taxes across the commonwealth, and replacing those taxes with funding from personal income taxes, and the sales and use taxes.

The legislation is designed to be tax revenue neutral.

The meeting, which is open to the public, will start at 7 p.m. at Bristol Borough hall, 250 Pond St. The meeting will be televised, so Bristol residents can watch it live from their homes.

The public can submit questions to Galloway’s office until 5:30 p.m. the night of the meeting through his webpage, www.pahouse.com/galloway, facebook, www.facebook.com/RepGalloway, or twitter.com/repjohngalloway.

Berks County resident David Baldinger, who administers a Web-based taxpayer organization, Pennsylvania Taxpayer Cyber Coalition, will speak at the meeting.

He became involved in the effort in 2004 and since then has become one of Pennsylvania’s leading experts on property tax elimination issues. His website is www.ptcc.us, where HB76 is explained in detail.

Morrisville resident Robert Allen, 63, believes the legislation would benefit taxpayers across the commonwealth, especially seniors who live on limited incomes.

He said if property taxes continue to increase, he might be forced to leave his house.

“It’s a weight I constantly have in my head,” Allen said. “I’m not trying to get out of paying my taxes. I’m willing to pay my fair share.”

Bristol school board President Ralph DiGuiseppe III said at last week’s meeting that the idea in theory sounds good, but he’s concerned about how it would affect smaller districts such as Bristol.

“We can all agree that eliminating school taxes is nothing but a huge positive to anyone who owns a house and all taxpayers,” DiGuiseppe said. “The downside that nobody is addressing is what’s going to happen to little Bristol Borough … when you have a district no longer setting the budget or implementing taxes to keep up with special education (costs), teachers’ salaries and (building maintenance.)”

All that is being guaranteed is the coverage of cost of living, he added.

Rep. Jim Cox, R-129, who is the prime sponsor of the bill, wrote in a memo to the House earlier this year that the proposed legislation has been meticulously crafted to ensure the tax swap provision of the plan doesn’t raise more than is already collected by the school property tax mechanism. And that the taxes would be replaced dollar-for-dollar in each district without arcane formulas that redistribute wealth.

“The Property Tax Independence Act’s revenue replacement mechanism moderately broadens the base of the state sales tax to include more services and products at a new 7 percent rate,” Cox wrote in the memo. “Pennsylvania currently has one of the narrowest sales tax bases in the nation and broadening of the base is a powerful key to adequate revenue generation. Life necessities and business-to-business transactions will continue to be exempt from the sales tax.”

While the sales tax would generate almost two-thirds of the proposed legislation’s revenue, the remainder of the funding necessary to replace the school property tax would be generated by a “modest increase” in the state personal income tax from 3.07 percent to 4.34 percent, Cox explained.

He argues that the two taxes would be predictable and provide a stable funding source that would automatically increase revenue in sync with economic growth; unlike the current system that’s not based on economic growth, and is subject to annual tax increases.

Additionally, unlike the property tax that has no relationship to family income, both the sales tax and the personal income tax are directly tied to a person’s ability to pay, Cox said.

If the legislation passes, the plan would be to eliminate the school property tax during a two-year phase-out.

In the first fiscal year after enactment, school property taxes would be frozen at their current level. Then, in the second year the school tax would be completely eliminated except for a small portion that would be retained in each school district to retire the individual district’s outstanding long-term debt, Cox said.

The legislation would eliminate school boards' ability to increase taxes. It wouldn’t impose any new mandates of any kind on school districts.

“The only exception would be a possible local earned income tax or local personal income tax for major projects such as new school construction, and that will be subject to a no-exception taxpayer referendum,” Cox wrote in the memo.

Cox is adamant about the legislation because homeowners of all ages are facing hardship because school property taxes continue to rise at a rate of more than three times that of inflation.

“Polls of real estate professionals have indicated that through the elimination of the school property tax – the greatest portion of the monthly escrow and an amount that in some areas can equal the mortgage payment – Pennsylvania’s real estate market would explode with new buyers,” Cox wrote in his memo.

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